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The Ratio-Analysis Framework: A Managerial Finance Perspective
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Article 7 — Funding and Capital Structure: Choosing the Right Money for Growth
1. Why Every Business Needs Funding Every idea eventually meets a moment where ambition costs money. Equipment, marketing, staff — each step forward needs capital. Funding isn’t just about cash; it’s about control, risk, and ownership. When you take money, you’re not only adding fuel — you’re trading influence. Startups must learn to ask not only how much but what kind of money they want. [Funding Ladder]The Funding Ladder shows how most businesses grow financially: 1. Bootstrapping 🟦 – using your own savings; total control,...…
Article 6 — Cost Control and Efficiency: Making Every Pound Work
The Logic of Cost Control Growth without control is chaos. You can raise revenue, but if expenses rise faster, you’re only running on a bigger treadmill. Cost control isn’t about cutting — it’s about understanding. It’s the discipline of asking: ““Does this expense create value or waste?”” [Cost Layers Pyramid Foundation -> Flexibility -> Management]Every business stands on three layers: 1. Fixed Costs 🟦 – rent, salaries, insurance: the base. 2. Variable Costs 🟧 – materials, delivery, commissions: they rise with output. 3. Controllable Overheads...…
Article 5 — Profitability & Ratios: Measuring Performance Beyond Numbers
Why Ratios Matter Financial statements give data; ratios give meaning. They show how efficiently SweetBite Bakery and TechNova Solutions turn money into results. “Accounting records performance. Ratios explain performance. [Profit vs Efficiency vs Return]Three dimensions every founder must know:” 1. Profitability – How much value each pound of sales creates. 2. Efficiency – How well resources are used. 3. Return – How effectively owners’ money grows. Profitability Ratios – “How Much Do We Earn Per Sale?” Ratio ...…
Article 4 — Budgeting and Forecasting: Turning Guesswork into Strategy
Why Planning Matters A company that does not plan its money plans its failure. Budgeting and forecasting are how founders move from emotion to evidence: • Budget = what you expect will happen. • Forecast = what you see happening and then adjust. Every financial decision — from hiring to new features — sits between those two numbers. A plan keeps you disciplined; a forecast keeps you alive. [Budget vs Forecast loop]The logic: 1. Budget defines targets. 2. Forecast updates reality. 3. The loop continues...…